Every now and then, the cryptocurrency community is taken ablaze by a new project that does the rounds.
Now, it seems that Bitclout is where all the rage is – a new type of social network, the intention of which is to enable users to speculate on people and posts with real money.
Let’s have a closer look at what Bitclout is and why it is so popular right now.
What is the Bitclout Network?
Bitclout is a new decentralized protocol that brings forwards a social network, enabling users to speculate on people and posts using real money.
According to the project’s official whitepaper, it’s set up on its own custom blockchain and boasts a similar architecture to Bitcoin. However, it can only support data like posts, follows profiles, and other speculation features.
Without providing any further information about the technology behind the product itself, the whitepaper goes on to explain everything about its native cryptocurrency – BitClout, and the things users can do with it.
Yet, it mentions that “just like Bitcoin, anyone on the internet can run a BitClout “node” that serves the BitClout content, and every node on the network stores a full copy of all the data.”
The BitClout Cryptocurrency
BitClout can be bought for Bitcoin, and it can be used to “do all kinds of things on the platform, including buying a new type of asset called creator coins.”
Interestingly enough, the price for BitClout doubles for every million of BitClout sold – this is what supposedly makes the coin scarce. It also results in 10 to 19 million BitClout minted in the long run.
As mentioned above, users can spend their BitClout coins on creator coins, and this is where everything comes together.
Every profile that’s on the platform gets its very own creator coin – anyone can buy and sell it. The price of each coin, naturally, goes up if people buy it and vice versa. The main idea is to enable people to invest in profiles they believe will become more popular and more influential – “collect more clout.”
The developers had pre-loaded profiles for the top 15,000 influencers from Twitter, and users are already able to buy and sell their coins.
However, these profiles, if unclaimed, are “reserved” and are marked with a clock symbol next to their names.
In the above image, we can see that the profiles of Elon Musk, Katy Perry, CZ Binance, and so forth have yet to be claimed, and the profiles of Chamath Palihapitiya and Justin Sun have already been claimed.
We can also see that the price for these selected creator coins has already skyrocketed. For instance, at the time of this writing, Musk’s creator coin is priced at almost $68,000.
The Creator Coin Supply
According to the whitepaper, creator coins are designed to be scarce “with generally fewer than 100 to 1,500 coins in existence for each profile.”
The formula for determining the price of a creator coin is as follows:
A Twitter Ad Storm
One of the most ingenious things about BitClout is the way they’ve set up their marketing efforts. Basically, in order for anyone to claim their profile, they need to tweet about it. This is why last night we saw some big names in the crypto industry, such as Crypto Cobain, tweet the following:
By doing so, they “gain full access to the account, as well as a percentage of the creator coins associated with their profile.” Naturally, only the owner of the Twitter account that is associated with a reserved profile can claim it.
Each profile allows its creator to keep a percentage of the coins that are created as a “fonder reward.” So, for instance, if someone sets up their reward percentage to 10% and someone buys 100 BitClout of that coin, 10 BitClout would be used to purchase the coin, and this amount would go to the creator’s wallet.
“Importantly, the founder reward is only paid on “net buys” of their coin. So, if someone were to buy 100 BitClout of the coin, sell, and then buy again, the creator would only have 10 BitClout of their own coin at the end. Thus, the creator can own 10% of the total supply simply by setting their founder reward to 10% while being aligned with increasing the net buys of their coin indefinitely.” – Reads the whitepaper.
This sets up a very powerful marketing campaign where owners of big Twitter accounts popularize the platform by tweeting about it to claim their profiles. It creates a chain reaction, which is why we’re currently seeing a massive hype around the project.
Is BitClout a Scam?
BitClout Pulse is a service that’s officially not affiliated with the BitClout network. However, it pulls data from the public BitClout blockchain, and it offers a dashboard where users can monitor the performance of various profiles.
The BitClout block explorer can be seen here.
As of yet, the project is very young, and it’s objectively impossible to determine whether it is a scam or not. However, there are certain red flags with it that have been pointed out by plenty of prominent members of the cryptocurrency community.
First off, many people speculate that the project is backed by VCs who’ve pre-mined BitClout before it had hit the public market and are already sitting on huge profits. The same goes for creator coins, according to many.
“… VC’s and their friends have been buying this up for over a week behind a locked website, and they’re now allowing you to buy it from them for over 100x opening price. Not exaggerating, check the chain.”
He also detailed that “they and their friends have also been pre-mining all of the creator coins they think are most valuable, so you can enjoy paying a much higher price for those as well.”
Discussing some irregularities with the network itself was one of the most popular crypto Twitter accounts, loomdart, who pointed out the following:
On top of everything else, CryptoPotato reported on a Billboard entry on March 14th that BitClout has been selling celebrity NFTs without their consent.
In any case, it’s ultimately up to the user to determine whether BitClout is something to put their money into. Doing the necessary research is absolutely imperative. However, there are some red flags around the project that make it rather risky.
None of the above is financial advice. Investing in cryptocurrencies carries a high risk, and you can lose your money. For a full disclaimer, refer to the footer.